The case of the day is In re Petrobras Securities Litigation (S.D.N.Y. 2016). The action involves investors’ claims of losses due to a bribery and kickback scandal involving Petrobras, a Brazilian oil company. The plaintiffs sought approval from the court to serve a subpoena on Mauro Gentile Rodrigues da Cunha, a former Petrobras independent director. Mr. da Cunha was apparently in Brazil. However, he was born in Philadelphia and was therefore a United States national unless someone could prove by a preponderance that he had lost his US citizenship, and no one tried.
Under 28 U.S.C. § 1783(a):
A court of the United States may order the issuance of a subpoena requiring the appearance as a witness before it, or before a person or body designated by it, of a national or resident of the United States who is in a foreign country, or requiring the production of a specified document or other thing by him, if the court finds that particular testimony or the production of the document or other thing by him is necessary in the interest of justice, and, in other than a criminal action or proceeding, if the court finds, in addition, that it is not possible to obtain his testimony in admissible form without his personal appearance or to obtain the production of the document or other thing in any other manner.
The court found that da Cunha’s testimony was “necessary in the interest of justice” given his role on the Petrobras board and its audit committee, and that there were no other practical methods of obtaining the testimony given the length of time it would take to execute a letter rogatory.
How to serve the subpoena? The subpoena is plainly a judicial document, but Brazil is not a party to the Hague Service Convention, so there are no issues about the Convention’s exclusivity. The plaintiffs sought leave to serve the subpoena via the Inter-American Convention on Letters Rogatory and in the alternative by email, overnight mail, or personal service. Now, you may be looking at FRCP 45(b)(1), which requires service by personal delivery, and asking whether alternate means of service are available. But § 1783(b) provides that service “shall be effected in accordance with the provisions of the Federal Rules of Civil Procedure relating to service of process on a person in a foreign country.” So the plaintiffs approached this correctly.
The court held that there was no need to take the time to attempt service via the Inter-American Convention before making use of alternate means. It held that the plaintiffs should make best efforts to serve the subpoena in person, and if they failed, then by email or overnight mail.
Of course, serving the subpoena is just half the battle. A deposition taken in Brazil must be permissible under Brazilian law. I disclaim any real knowledge of Brazilian law on this point, but here is what the State Department’s website has to say:
Brazilian authorities do not permit persons, such as American attorneys, to take depositions for use in a court in the United States before a U.S. consular officer, with the assistance of a Brazilian attorney, or in any other manner. Brazilian law views the taking of depositions for use in foreign courts as an act that may be undertaken in Brazil only by Brazilian judicial authorities. The Government of Brazil asserts that, under Brazilian Constitutional Law, only Brazilian judicial authorities are competent to perform acts of a judicial nature in Brazil. Brazil has advised it would deem taking depositions in Brazil by foreign persons to be a violation of Brazil’s judicial sovereignty. Such action potentially could result in the arrest, detention, expulsion, or deportation of the American attorney or other American participants. The United States recognizes the right of judicial sovereignty of foreign governments based on customary international law and practice. It is the State Department’s understanding that the Brazilian prohibition on taking depositions by foreign persons extends to telephone or video teleconference depositions initiated from the United States of a witness in Brazil. The U.S. Embassy or Consulates in Brazil could in no way participate in, or otherwise sanction, such a proceeding. The State Department advises U.S. citizens contemplating participation in such a proceeding, without Brazil’s concurrence, obtained through diplomatic channels, to consider carefully the possible legal consequences of doing so.
Yikes! So let’s suppose the subpoena will call on de Cunha to travel to the United States or some third party to testify. I don’t know the details of this situation, but the US court has no direct power to compel de Cunha’s attendance, and its indirect power may depend on what property and connections de Cunha has with the United States. It seems unlikely that a Brazilian court would require de Cunha to obey the US subpoena. A docket entry suggests that the plaintiffs want the deposition to proceed in New York. Smart move from the perspective of avoiding sanctions in Brazil. It remains to be seen whether it’s an effective move, in a practical sense.